Why Costco Stock Got Thrashed on Thursday

Thursday ended up being a somewhat atypical day for Costco Wholesale (NASDAQ: COST) stock. That was no fault of the retailer, as this usually popular company tends to trade up rather than down.

But one rival that's often mentioned with it in the same breath posted some discouraging news, and the market punished Costco by association. Its shares declined by 2.6%, while the S&P 500 index only dipped 0.4%.

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Peer pressure

Said rival is none other than the ubiquitous Walmart (NYSE: WMT), and the news item was its just-published, fourth-quarter and full-year fiscal 2025 financial results. Although the mighty retailer saw decent growth on the top line on a year-over-year basis, its net income tumbled a bit.

It did notch beats on both metrics. However, its profitability guidance for the remainder of fiscal 2026 fell notably short of the average analyst estimate.

Costco isn't Walmart, of course. The largest difference between them is that the former operates like a club with a membership requirement. Walmart is effectively a chain of giant supermarkets where anyone can walk in and shop. Still, they operate in the same retail environment, so when there's concern about one, it can be reflected in the other.

Investor overreaction

Personally, I found more to like than dislike in the Walmart numbers. International e-commerce was a particular hot spot, rising by a very robust 16% year over year during the quarter. Overall revenue growth topped 4%, showing me that the sprawling company is still finding ways to get people to buy its merchandise. I'm bullish on big retail generally -- and Costco (not to mention Walmart) specifically.

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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Costco Wholesale and Walmart. The Motley Fool has a disclosure policy.